Important Reminder for Doing Business in Areas Affected by Hurricane Sandy

October 30, 2012

When unforeseen circumstances cause unexpected borrower hardship, Freddie Mac is ready to respond through policies that allow you to proactively offer temporary relief to borrowers who are trying to honor their mortgage obligations in good faith. While it is difficult to speculate on the full impact of Hurricane Sandy at this time, borrowers may experience disruptions in their ability to make their mortgage payments on time. We are asking Freddie Mac Servicers and Sellers to be responsive to any requests for assistance from affected borrowers by using options available through our Single-Family Seller/Servicer Guide (Guide). We rely on both Servicers and Sellers to determine the number of impacted properties and the extent of damage to each.

Servicers should begin ascertaining the number of impacted properties and assessing the extent of the damage caused by Hurricane Sandy, and should review Guide Chapters A65, B65, and C65 for general mortgage relief policies.

Due to Hurricane Sandy’s destruction, the President of the United States issued Major Disaster Declarations for certain localities in several states, and federal Individual Assistance programs are available. When the President of the United States issues a Major Disaster Declaration where federal Individual Assistance programs are made available for a designated area where borrowers with Freddie Mac-owned mortgages reside, Servicers should immediately begin following the disaster relief requirements outlined in Guide Chapter 68, which include:

Short-term suspension of collection and foreclosure proceedings for up to 12 months from the date a disaster strikes to help accommodate financial hardship, based on the relative merits of each case.

Not assessing late charges or reporting to credit repositories for borrowers on a forbearance plan or paying as agreed on a repayment plan.

Providing help with options for local, state, or federal disaster assistance.

Monitoring and coordinating the insurance claim process.

Visit FEMA’s website to find out which specific locations are impacted by a Major Disaster Declaration.

If Servicers have a unique situation that warrants special relief consideration, we will review individual circumstances on a case-by-case basis.

Sellers should review the Guide and their procedures for inspecting and recertifying a mortgaged property’s value, condition, and marketability when a disaster occurs. Sellers should be prepared to address property damage as a result of Hurricane Sandy, per Guide Section 44.2(c). We encourage Sellers to review Guide Section 22.20 about circumstances that adversely affect the value of a mortgage, including condemnation. Sellers should also review Guide Section 44.2(b), which requires Sellers to warrant that improvements must be undamaged by fire, windstorm, and other perils.

For More Information

Contact your Freddie Mac servicing representative or 800-FREDDIE.

Servicers should review Guide Chapters A65, B65, and C65 for general mortgage relief policies, and Guide Chapter 68 for disaster relief policies for locations that are impacted by a Major Disaster Declaration.

Sellers should review Guide Sections 22.20, 44.2(b), and 44.2(c) for Seller responsibilities when a disaster occurs.

Visit FEMA’s website to find out which locations are impacted by a Major Disaster Declaration.